THE VALUE OF SOURCE-TO-PAY SUITES MODEL

Transcription

1 Hot topics, Perspectives, and Debates - Trending in Procurement brings you the trends and analysis for your Procurement needs. THE VALUE OF SOURCE-TO-PAY SUITES MODEL "The Source-to-Pay suite model is a powerful tool for any Procurement Department looking to new drivers to improve their organization performance. As demonstrated in the last edition of Trending in Procurement survey, it is crucial for Procurement Departments, when selecting and implementing a Source-to-Pay solution to take into account a range of criteria, both human and technological, in order to maximize benefits. Gérard Dahan, EMEA Managing Director, Ivalua

2 Each day, multinational corporations have to process thousands of invoices, purchase requisitions, supplier data, contracts, expense forms etc. To meet this challenge, more and more procurement departments are deploying "Source-to-Pay" suites (S2P suites) which can be defined as a suite of integrated applications designed to manage the procurement processes from strategic Sourcing and Spend Analysis to operational Procure to Pay activities, within a single solution. The S2P suites model allows for the easy and efficient management of activities as diverse as: auctions, spend analysis, purchasing categories management, purchase requisitions, sourcing events, billing and vendor relations. These Source-to-Pay (S2P) solutions, have not all been developed according to the same model. There are "homogeneous" suites developed from a single source code, a single database, a single server and a single supplier table, and there are "heterogeneous" suites developed from a variety of source codes (different modules developed from different source codes) and/or thanks to the mergers and acquisitions of niche procurement software vendors (or single-module). To better understand the expectations of procurement decision-makers in terms of S2P solutions and to answer all your questions about their benefits, Trending in Procurement has interviewed procurement professionals to find out what they think: o How do S2P solutions enable Procurement departments to better manage the company's spend? o Do all S2P solutions allow the same gains? o What is the most efficient deployment method? o What types of expenses can or cannot be managed in an S2P solution?

3 Panel of the Trending in Procurement survey The Trending in Procurement questionnaire "The value of Source-to-Pay suites model» was sent by to a database of European and North American procurement professionals. A total of 210 responses were collected and analyzed. Your annual spend budget: What s your Job title?

4 What benefits are you expecting from the deployment of a S2P integrated suite? The expected benefits of the deployment of a S2P solution are many and varied: Effectiveness and performance lever for procurement departments Some of the benefits considered as being "very important" by the Trending in Procurement participants include: increased productivity of procurement staff (100%) and a better analysis of spend thanks to the centralization in a single database of all information (90%). Other advantages of S2P solutions: quick and sustainable users adoption, improved contract compliance and a lower cost of procurement process.

5 Simplified administration Most participants consider that S2P solutions present great advantages in terms of administration: ease of administration thanks to a single architecture (94%), having a uniform data structure (88%) and having just one vendor to manage (67%). It must be noted that many of the benefits expected by the panel (from an administrative view point as well that of the efficiency of purchasing departments), can only be carried out in a homogeneous environment: same source code, same architecture, same database and same data object. Practical examples: Example 1 - Better spend analysis thanks to the centralization in a single database: case of the analysis of spend by suppliers. A homogeneous Source-to-Pay suite (single architecture database shared by all the modules of the suite) affords integrated and multi-dimensional analyses made simply and effectively thanks to the linking of integrated data with all the modules of the solution: supplier data, contract data, invoice data, delivery data, etc. These are single and shared by all modules. A niche solution (e.g. an invoice management solution) has to go through an external analysis solution (data warehouse) to cross supplier data, contract data, etc. from the various information systems used by the company. A heterogeneous solution (integrated modules but developed on different databases) will certainly involve a level of complexity because it will have to cross databases from different modules in order to be able to analyze spend: the supplier database of the contract module, the supplier database of the SRM modules, the supplier database of the e-procurement module, etc.

6 Example 2 Improved performance of procurement staff: case of the creation of a contract following a tender award. The link between the end of a negotiation process (RFx) and the formalization of the contract is a strategic aspect of procurement process management. In a homogeneous Source-to-Pay suite, the price, the documents created by the buyers and suppliers (draft contracts, appendices, technical documentation, etc.) can be copied from the screens of an RFx (e-sourcing module) and imported directly in a contract (contract module) because the two modules share the same supplier database and documents, which provide users of the solution (buyers, lawyers, suppliers, etc.) with a real collaborative space and save them a lot of time given that procurement departments can handle several thousands of calls for tenders each year. Niche solutions (e.g., tender management solution) and heterogeneous solutions simply do not allow this transfer and procurement teams are obliged to re-enter the data from one module to another. Example 3 - Ease of administration thanks to a single architecture: case of the administration of procurement repositories A homogeneous Source-to-Pay suite offers a single data architecture: the database (organizational repositories, suppliers, types of tender) is then shared by all the functional modules of the application. This simplifies the administration of repositories considerably. For example, the editing (addition/deletion/update) of a tender type in the e-sourcing module will be automatically and instantly visible in the spend analysis module. In a heterogeneous solution, the administration of purchasing repositories requires that each change be duplicated in each module where the repository is used because the databases are attached to each module and not the suite.

7 If you were to deploy a Source-to-Pay, which procurement categories would you consider managing apart in a specialized procurement tools? The types of purchases most often cited by the panel as likely of being managed in a specialized solution are: travel &expense, service procurement and commodity procurement. This distinction in procurement categories is primarily related to the specific characteristics of the processes and rules linked to these categories. The management of travel & expenses is often at the intersection of several company departments: HR, Finance, Procurement, etc. services procurement involves unavoidable human considerations, and lastly raw material procurement (commodity) is considered to be highly strategic and is increasingly involving geostrategic challenges. E-Procurement solution vendors only rarely take these specificities into account. This obliges procurement departments to manage them outside Source-to-Pay solutions already in place or to turn to niche solutions specialized in one of these areas. Consequently, these types of purchases have often been excluded from the scope of S2P suites and the benefits that they

8 bring, in particular, in terms of spend analysis, performance gains for the procurement teams and ease of administration. Note that some S2P solutions vendors have developed specific modules to manage this particular types of purchase (e.g.: Services procurement management) thus enabling their management and full integration into a Source-to-Pay suite. In your opinion, what is the best method for deploying a S2P suite? Not surprisingly, most participants in the Trending in Procurement survey (72%) feel that the deployment method the best suited to Source-to-Pay suites is step-by-step, module after module. The deployment of a Source-to-Pay suite involves the complete overhaul of the procurement information architecture and therefore, a heavy workload split between the project actors: procurement teams, IT team, software vendors, and integrators. Some companies, who have sufficient resources, choose to deploy the different modules at the same time. However, most of them decide to deploy their Source-to-Pay solution by modules or by module batches. The deployment of a S2P suite involves a change management strategy that mobilizes the various players involved throughout the project, a strategy which, according to best practices, must rely on efficient and regular communication, the users training and a strong commitment of the procurement department executives and the top corporate management team. The timeframe for achieving the benefits of the Source-to-Pay solution is, in this case, longer because the deployment is spread over time compared with a "standard" e- procurement project.

9 Which of the following elements could deter your Procurement department to implement a Source-to-Pay suite? The curbs to the implementation of Source-to-Pay solutions are neither based on the maturity of the solutions proposed on the market, nor on their benefits. 75% of the Trending in Procurement panel consider that S2P have demonstrated their utility and benefits while 70% of participants do not question the maturity of S2P currently on the market. The main curbs ("very important" items) identified by the participants are the duration of deployment of S2P solutions on one hand, and the fact that a procurement department

10 may have already deployed modules linked to a niche vendor (vendor specialized in invoice management, for example) or a software vendor that does not offer a complete S2P suite (e.g. e-procurement solutions vendor). In the first case, Procurement Departments that are reluctant to set up a Source-to-Pay solution because the deployment time is too long must apply an ROI approach and calculate the ratio between the resources invested (time spent by teams, budget, etc.) and the qualitative and quantitative benefits expected (gain in efficiency, time saved for purchasing teams, gains in financial performance for the company, etc.). If the gains expected are higher than the investment, the question as to the acquisition and setting up of an S2P suite is to be seriously considered. In the case where there are more than one e-procurement modules published by different vendors, the end of the commitment period with each vendor should be the occasion to think about adopting a S2P suite. Indeed, as seen above, it is deployment by module that is the preferred method for deploying a Source-to-Pay solution. The replacement of niche solutions, module by module then becomes a strategy adapted to the company's resources (human and budget) and contractual commitments.

11 Conclusion There are many advantages of Source-to-Pay solutions and they are generally well understood by purchasing departments. A S2P solution deployed in a company enables it not only to make qualitative and quantitative gains, but also significantly improve the efficiency of procurement teams. These advantages include: access to a precise and efficient spend data and analysis, which results in a better control of spend and de facto, a better application of framework contracts negotiated by the procurement departments. Trending in Procurement highlights several elements that Procurement Departments must take into account when choosing and setting up a S2P purchasing solution in order to maximize the benefits: The deployment mode: as in any IT project, the deployment strategy is a key success factor. The Procurement Departments must beforehand raise the issue of the resources necessary and available for the project. Although 78% of the panel considers that a progressive deployment by module is the preferred solution, in practice, the change management strategy that accompanies the deployment as well as the training and involvement of the top-management continue to be the essential conditions for a successful deployment. The types of purchase that will be managed in the S2P suite: the types of purchases that a Procurement Department would like to manage in a Source-to-Pay suite are decisive in choosing the solution. If the company wishes to manage all purchase types in a single solution, even the most specific (services, intellectual services, raw materials, travel purchases and expense accounts), the Procurement Department should look for a vendor that offers custom modules and/or modules that are so flexible that the specific characteristics inherent to these types of purchases can be integrated into the settings of the solution. The environments proposed by the various market players: the benefits of Sourceto-Pay suites are very closely linked to the technical environment proposed by the vendor. This is because the advantages of these solutions in terms of team performance (time saved, etc.), ease of administration and improved spend analysis can be fully achieved only in a homogeneous environment (1 code, 1 database shared by all the modules of the solution).

12 About Ivalua Established in January 2000, Ivalua is one of the leading global vendors in Spend Management Software today. The company s software suite Ivalua Buyer covers the whole Spend Management spectrum, from supplier relationship management to spend analysis, with e-sourcing, e-procurement and invoice management in between. Based in the US and Europe, Ivalua has successfully implemented more than 150 projects within large international companies in all sectors, enabling Ivalua to demonstrate strong growth while remaining profitable since its creation. Ivalua solutions have been widely tested and adopted by several tens of thousands of users worldwide. Thanks to its ecosystem of partners, Ivalua supports its clients with a wide range of services and content integrated within its solutions. For more information, visit or contact us by on [email protected] Find out more about the Source-to-Pay solutions and ask all your questions to our experts during the next Ivalua webinar: Source-to- Pay Solutions: a strategic driver of performance for Procurement Thursday, May 22, 2014 at 13:30 GMT More information and free registration on: